A Free-Market Energy Blog

Editor Note: Captive customers of franchised, monopolistic utilities should decide for themselves whether or not to participate in so-called demand-side management (energy conservation) programs. Jim Clarkson of Resource Supply Management Company filed testimony to this effect as part of Georgia Power Company’s 2019 Integrated Resource Plan.

Comes now, Resource Supply Management and shows the Commission that participation in Georgia Power’s Demand Side Measures (“DSM”) programs should be voluntary:

One way to provide a little relief to ratepayers from the cost of Vogtle is to allow customers to op-out of Demand Side Measures instituted by Georgia Power and approved by the Public Service Commission along with the associated surcharges on customer bills. These energy efficiency programs are supposed to reduce customer use of electricity, which is the last thing Georgia Power needs to do in their current situation. The drawbacks to utility Energy Efficiency programs are:

Georgia Power’s DSM programs are funded by additional charges to customers which deprive customers of the funds to institute their own energy efficiency measures. This is especially important for low-income families. As it is now all low-income households pay the DSM surcharge but only a few will have their homes weatherized.

Georgia Power’s DSM programs are very expensive due to high administrative overhead costs, utility profits and taxes on profits. For every one dollar Georgia Power gives away in rebates the utility collects about four dollars from customers. These programs are not the best way to achieve energy efficiency.

Utility DSM programs crowd-out, stifle, pre-empt and discourage voluntary market-developed energy efficiency measures. Again, this hurts low-income families the most as they become dependent on government policy rather than self-help.

Both utilities and customers game the DSM programs. Utilities take credit for things that would happen anyway. Customers wait for utility assistance instead of initiating their own measures. Free riding is rampant. There is also a “snap back” effect from energy savings as customers use more power to enjoy amenities such as having a second refrigerator and keeping the house cooler. Low-income households already cut energy use due to high power bills, with the institution of efficiency measures they increase comfort thereby offsetting projected energy savings.

The mandatory aspect of DSM programs assumes customers are too stupid to make wise decisions and need experts who know better how to run their lives. This takes away choice and freedom.

The original rationale for such programs twenty years ago was that we were running out of energy; we now know that’s not true.

Further, the original argument that saving energy was cheaper than new generation is only true if the customers do their own energy efficiency. With additional utility costs and profits, utility-run DSM programs are more expensive to customers than the avoided cost of generation.

The more recently adopted justification for forced efficiency is that reducing energy use saves us from global warming. Yet almost every week comes news that the climate alarmists’ assertions are wildly exaggerated and their predictions wrong. The public concern about global warming is dwindling due to over-hyping and phony scare tactics.

WHEREFORE, RSM petitions the Commission to make DSM
programs voluntary for all customers.